THE IBNS INTRODUCTIONINTRODUC TO BANKNOTES &BANKNOTE COLLECTING Prepared by members of the International Bank Note Society. © 2018 e International Bank Note Society. www.theIBNS.org Table of Contents Introduction 3 e Banknote 4 What is a Banknote? 4 Other Paper Instruments 6 What is Legal Tender? 9 Features of a Banknote 10 Why are Banknotes Interesting? 13 How is a Banknote Manufactured? 15 Essays, Trials, Proofs and Specimens 22 Collecting Banknotes 23 Catalogues 23 Types and Varieties 24 Grading Banknotes 26 Forgeries 30 What to Collect? 31 How to Build a Collection 32 What Condition to Buy 32 ird-Party Grading 33 Processed Notes 33 Collectors and Investors 34 How to Store a Collection 34 e Equipment a Collector should Own 35 Disposing of your Collection 36 Join the IBNS 36 2 e IBNS Introduction to Banknotes & Banknote Collecting Introduction his guide is an introduction for people pursuing an interest in T banknotes and gives the beginner a description of the banknote, its various features and how banknotes are manufactured. Included in this guide is an outline of aspects to be considered when building a collection of banknotes. While there are many numismatic organizations throughout the world, the International Bank Note Society (IBNS) is the premier organization for people interested in banknotes of the world. Membership of the Society includes collectors, banknote dealers, auction houses, libraries, numismatic publishers and institutions. Membership in the IBNS has numerous benets, principally bringing together people with a common interest in banknotes. One of the main benets of membership is receiving the quarterly IBNS Journal—a full colour, 80-page magazine with articles on banknotes and covering aspects of the Society’s activities. A web site at www.theIBNS.org oers information on banknotes, the Society’s activities and the Society’s members. A forum on the website is available for members to discuss matters and ask questions. e IBNS Directory lists all members of the Society, usually with their contact details and their collecting interests; with the Directory distributed to all members. Two annual postal bid auctions are also available for members to sell and buy banknotes. To gain the most from an interest in banknotes, membership of the IBNS is recommended. Once a collection has commenced, the new collector will nd answers to further questions by contacting fellow collectors, reading specialist publications, or obtaining general publications on banks and banknotes. Reference to this guide may also prompt collectors to nd out a little more about the banknotes they already possess. We certainly hope your interest in banknotes continues for many years. e IBNS Introduction to Banknotes & Banknote Collecting 3 What is a Banknote? oday, the term “banknote” or “bank note” is used to T generally describe paper money issued by various authorities around the world, but banknotes are not always issued by banks. “Paper money” is another term commonly used to describe banknotes, as this term does not limit items to articles issued by banks, but it also includes items that are not made of paper. In some countries “currency” refers to paper money, but this term usually refers to ocially issued notes. (Another denition of “currency” is “at which is current as a medium of exchange; the circulating medium (whether coins or notes); the money of a country in actual use.” Oxford English Dictionary (OED)) So, despite perceived inaccuracies, the term “banknote” is commonly used to refer to paper money in its various forms. In most countries banknotes are issued by a central bank, supervised by the government. In some places, banknotes are not issued by a bank, but are issued directly by the government, such as in the British dependencies St. Helena and the Falkland Islands. Similarly, in some countries, banknotes have been issued by the treasury of a government and not by a central bank, but they are nevertheless still regarded as banknotes. Originally, banknotes were issued by private banks and governments issued only coins. ere remain several places in the world where private banks continue to issue banknotes for general circulation, rather than be issued by the government—this still occurs in Hong Kong, Scotland and Northern Ireland. e earliest banknotes were one of a number of paper money instruments used by individuals and companies to engage in transactions, all of which represented a promise to pay a certain amount of money specied on the banknote, at a certain point in time, and some of which were made payable to the bearer (the person holding the paper money) and some that were payable to a particular person. The Banknote A modern banknote from Ethiopia, issued by a central bank—the National Bank of Ethiopia. 4 e IBNS Introduction to Banknotes & Banknote Collecting is banknote, a post note, was issued by a private company and was payable to an individual, (or order) aer a specied period, in this case aer 45 days. It was not payable “on demand” as is the case with most banknotes. e particular features of a banknote, over other types of paper money, is it was usually payable to the bearer and usually payable on demand. Originally, a banknote was “A promissory note given by a banker, payable at a xed date to a specied payee.” (OED) Later, a banknote became “A piece of paper money of a xed denomination, circulating as currency.” (OED) While most types of banknotes now e Royal Bank of Scotland is one of three private banks to issue banknotes have all details printed during their in Scotland. Although authorized to circulate, the notes issued by the Scottish manufacture, originally they were banks are not legal tender. handwritten, and then partially printed as “forms” to be completed by hand at the time of issue. e items to be completed varied, but usually consisted of the date, the serial number and the signatures. Banknote forms that are not completed are known as “remainders” and modern banknotes that have never been issued can also be referred to as remainders. Above: is banknote was prepared for the state of Biafra, which seceded from Nigeria in the late 1960s. is note has no serial numbers, was never issued, and is thus regarded as a “remainder.” Typically, modern banknotes without serial numbers, or signatures, and sometimes the date – items oen added aer the printing of the note – are considered remainders. Le: is is a privately issued note for seven shillings. e form was prepared for the Ballindalloch Cotton Works, and promised to pay one guinea (21 shillings) if three of the notes were presented. Most of the form is printed, but several areas of the form had to be completed by hand—the date, the serial number, the signature and the name of the clerk who entered the note into a register. e IBNS Introduction to Banknotes & Banknote Collecting 5 Other Paper Instruments A hand-written bill from Scotland, ther types of nancial Note (or Note of hand): A written dated 1757. O instruments associated with promise to pay a certain sum at a paper money are: specied time. (OED) Bill (or Bill of Exchange): A written Bank post bill: Originally a order by the writer or “drawer” to promissory note intended to be the “drawee” (the person to whom conveyed to its recipient by mail, but it is addressed) to pay a certain sum later used as post-dated bills, or post on a given date to the “drawee” or notes, and were payable at a future to a third person named in the bill, date; i.e. post dated. known as the “payee”. (OED) A Bank Post Bill issued by Beresford’s Bank, Ireland. 6 e IBNS Introduction to Banknotes & Banknote Collecting Cheque (check): A written order (on a printed form or otherwise) to a banker by a person having money in the banker’s hands, directing him to pay, on presentation, to bearer or to a person named the sum of money stated therein. (OED) Letter of credit: A letter or document, especially one issued by a bank or other nancial organization, authorizing a named person to draw money to a specied amount from the issuer’s agents or business associates in another place. (OED) Circular note: A letter of credit addressed by a banker (e.g. in London) to several bankers in other countries, in favour of a certain person named therein, usually a person on a tour. Above: A specimen letter of credit issued by “Skiensordens Kreditbank” in Norway, for the provisioning of a ship. Le: A cheque drawn on the Cairo branch of Barclays Bank (Dominion, Colonial and Overseas). Le: A specimen Circular Note (Billet de Change Circulaire) prepared for e City Bank, Limited, London. e IBNS Introduction to Banknotes & Banknote Collecting 7 Travellers Cheque: A cheque for Bearer Security: An unregistered Private Issues: While most one of several specied amounts security the title to which is vested banknotes are ocial issues, by a of money, that can be cashed at a in its possessor and is transferred government or by a central bank, bank in most countries, or used in by simple delivery. So bearer bond, there are many private banknote payment for goods, on the holder’s bearer stock, bearer warrant. (OED) issues. Some of these were issued endorsement against his original by owners of factories or by store signature. (OED) merchants, but there have famously been individuals who have attempted to issue their own banknotes. Fantasy Issues: Because of the general interest in banknotes, it is now common for people and companies to produce banknotes which have no value, but which imitate banknotes. Some of these are very professionally manufactured and some are poorly produced.